This Guide is supplied for general information only. You should seek specific advice for your individual circumstances before acting on any suggestions made.
What are Hospital Cash Plans?
Hospital cash plans pay a given amount of money if you are required to stay in hospital for any of a number of given reasons. The main idea behind these plans is to provide cover for day-to-day living expenses for yourself or your family, or to cover additional expenses such as childcare, travelling or accommodation costs. Some plans may also pay out up to a given limit for certain types of medical treatment.
Cash plans will not provide cover in respect of a pre-existing illnesses.
Any money paid out as the result of a claim under a cash plan is normally paid tax-free.
We also recommend that you contact the Department of Work and Pensions to check if any state benefits may be effected by any money received from this type of plan.
What different types of plans are available?
The main differences between plans will be the level of benefit they provide. Other differences may include:
- Differences in the time between when you first establish the policy and the point at which you can first make a claim. This period is frequently set at 6 months from the date you start the plan
- Setting a monetary limit over the maximum amount you may claim during any 12-month period. Some plans place a limit on the number of items, such as prescriptions, for which you can claim.
- Differences in the medical conditions that the insurer allows under the policy. Some insurers also only offer insurance cover if you are required to stay in hospital for specific periods of time.
What should I think about when choosing a plan?
It is important that you decide what amount of cover required in relation to your personal circumstances. For example, if there are any children needing to be cared for while you are unavailable then you might opt for a higher level of benefit than would be the case if you only had to replace your regular income. In the latter case, you should check how long your employer will pay your salary at full rate were you to be away from work through illness or as the result of an accident.
You should decide whether you want to receive a lump sum, which can be spent as you require, or whether it is better for you to receive assistance with potential medical costs. You may already have a private medical insurance plan that will cover medical costs and therefore a lump sum would be more suitable for your needs. Some people use the proceeds of such a plan to take a holiday to assist in their recuperation.
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